The Best Student Loans To Pay For Your MBA (Business School)

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Betting an MBA is expensive. The Masters of Business Administration degree is a great way to bolster your business skills - but it does come at a price. According to a recent Investopedia article, the average cost of tuition alone for a 2 year MBA program is $80,000. And that's just tuition alone.

When you factor in the other expenses like books, room and board, and more, you could start seeing the price climb to between $100,000 and $200,000. And for a full time program, the opportunity cost of lost wages could be huge.

Whether you're looking at a part-time MBA program or a full-time MBA program, you're likely going to need student loans as one part of your financial aid pie. Here's what you need to know about paying for your MBA program, including the best student loan options to pay for your MBA.

If you already know most of your options and are simply looking to find the best private student loans, check out Credible and compare your options in 2 minutes with no credit check. Try Credible here.

The Order Of Operations To Pay For Your MBA

There is a smart order of operations to pay for your MBA program - and it doesn't start with student loans. Before you ever embark on an MBA program, you need to strongly consider the ROI (Return On Investment) of your MBA program.

The goal of an advanced degree, like an MBA, is to help you move your career (and salary) forward. Beyond your current job, an MBA also enables you to build a stronger network that might allow you to get a better job after graduation.

However, you need to align your MBA with your skills and job experience. An MBA loses a lot of it's value within 1-2 years after graduation. As such, you need to combine your MBA with your skills to maximize it's value. If you're over-educated and under-experienced, you won't see a great ROI.

When it comes to calculating the ROI, it's all about how much you're going to spend, and how much debt you're going to take on. Follow this list from best to worst to get an idea of how to pay for your MBA program.

Employer Tuition Assistance Programs

Your Own Savings

Scholarships and Grants

Direct PLUS Student Loans

Private Student Loans

Of course, there are variations on a theme - especially when it comes to paying for an MBA. For example, your employer might cover all the costs of tuition, and you just need to pay for the remaining items. This could lead you to change your order of operations, since Direct PLUS loans might be off the table.

It's always important to analyze what you need for your own situation.

Employer Tuition Assistance Programs

One of the awesome things about an MBA program is that many employers also different tuition assistance programs to help pay for all (or some) of the cost of getting your MBA. These programs might go under the name Tuition Reimbursement Program or Tuition Assistance Program.

For example, in my situation, my employer offered to reimburse me $5,250 per year until my MBA was paid off. This was win-win. It allowed me to get an MBA almost free, and my employer received some assurance that I would stick around - if I left, I didn't get any of the accrued money that was owed to me.

As such, I had to take out student loans up front to pay for my MBA, but my employer reimbursed me annually until the student loans were paid off.

Your Own Savings

After looking into employer assistance programs, you can potentially consider using your own savings. This is especially true for individuals who are going back to school mid-career. You might have enough in savings to make a strong dent in the cost of your MBA program.

A few rules to keep in mind when using your own savings to pay for an MBA:

Never use retirement plan money (i.e. don't pull or take a loan from your 401k, IRA, etc.)

Ensure that you have an emergency fund of at least 6 months

If you follow those rules, it's safe to use the other money to pay for school. This could significantly reduce or eliminate the amount of student loans you would potentially need to borrow.

Scholarships And Grants

Going back to school for an MBA, you might to even have considered scholarships and grants as something MBA candidates "do". But there is definitely free money available to graduate students like MBA candidates, and you should take advantage.

Also, don't dismiss grants either. There are a lot of different grants that you might qualify for if you put some time and research into it. Check out our guide on using grants to pay for college.

Direct PLUS Graduate Student Loans

If you've exhausted all the options to pay for your MBA, it's time to look at Direct PLUS Graduate Student Loans.

These loans can be take out to cover the maximum cost of attendance (according to your schools' financial aid office), minus any other financial aid received. For most MBA candidates taking out student loans, Direct PLUS Loans can make up the difference of what's needed to pay for college.

Direct PLUS Loans have some of the highest interest rates for Federal loans, so it's important to consider that when borrowing. If you have excellent credit, you might want to consider other options now or later.

Private Student Loans

Some MBA candidates cannot solely rely on Federal loans to pay for the cost of getting an MBA.

Either they exhaust Federal loan limits due to their school’s cost, they need more funds to cover living expenses while attending school, or they need more time to complete their education (which increases cost).

Others may find more value in taking on private loans given their excellent credit and ability to repay. In this case, private student loans may be a cheaper alternative due to low interest rates and excellent borrower programs.

We recommend borrowers shop and compare their private student loan options on Credible. We love Credible for a few reasons. They allow you to see your options in minutes with no credit check. The compare most of the major lenders. And they make the process of getting a private loan super easy.

Credible also has some of our favorite lenders for paying for graduate school, such as Citizens Bank.

Refinancing Student Loans After Graduation

If you're finding this article after you've already taken out loans for your MBA, you might consider student loan refinancing.

If you have private loans or high-interest Federal Loans (like the Direct PLUS Loans mentioned above), refinancing might allow you to lower your payment or save on interest on your MBA student loans. Through refinancing, you take out a new student loan from a private lender and use it pay off your other loans. With the new student loan, you may qualify for a lower interest rate, better repayment term, or lower monthly payment.

However, in some cases, MBA candidates are the exception to the rule. After getting your MBA, you might have the potential to see your salary rise by a significant amount of money. For many, this means they would benefit more from getting a student loan with a low interest rate, versus keeping a Federal student loan.

For example, Direct PLUS Graduate loans currently have an interest rate of 6.31%. But you can refinance with Credible and get a fixed rate loan as low as 3.15% right now. That would save you more than 50% in interest over the life of the loan!

See if Credible makes sense to refinance. You can shop loans in 2 minutes with no credit check. As a bonus to College Investor readers, you'll get $200 when you refinance with Credible. Check out Credible today.

Final Thoughts

The bottom line is that getting an MBA can be expensive, but for many, it's worth it. The trick is to ensure that you're figuring out how much it's worth - almost like Step 0 of your MBA education.

Remember, you can ensure that an MBA is valuable by paying as little as possible out of pocket. Start checking with your employer, and looking to maximize student loan tuition assistance programs. Only borrow in student loans what you absolutely have to.

Remember, what's the end goal of your MBA degree? Don't just go get an MBA "just 'cause'". Have a clear path to getting a return, and be mindful of how you spend and pay for it.

Filed Under: Student LoansTagged With: MBA, Student Loan Debt, Student Loan MBA, Student LoansEditorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.

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About Robert Farrington

Robert Farrington is America's Millennial Money Expert, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.

One of his favorite tools is Personal Capital, which enables him to manage his finances in just 15-minutes each month. Best of all - it's free!

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a mix of properties through Fundrise. Worth a look if you're looking for a low dollar way to invest in real estate.